Blog logoMatthew Lang

SAAS

A 8 post collection


Sustainable Services

 •  Filed under SAAS, Business

At a buck or few per app, how could it be otherwise? That type of pricing will work for Angry Birds and a handful of other games, but very poorly for most other types of software products. The scale you need, the sustained influx of new customers, well, it’s a place for mega stars, and people who think they can beat the odds at becoming just that.

That’s why I’ve been discouraging people from chasing dreams of a successful, sustainable software product business by pursuing paid apps. Far better be your odds at succeeding with a service where the app is simply a gateway, not the destination.

Don't Base Your Business on a Paid App by Signal v. Noise

Refreshing to hear an argument for web based subscription services that are proving be more financially stable and profitable than paid apps.

Deciding on a Pricing Strategy

 •  Filed under By Me, Pricing, SAAS, Products

I've been working on a new idea for a service for the last few weeks and I'm just about ready to take the wraps off it. While the core functionality of the service is happily working, I've been thinking a lot about the pricing strategy for it.

Freemium

I considered giving a basic level of functionality away for free, but the problem I have with this is that it is difficult to work out just what to include when you give a service away for free. Too much and you end up with more customers sitting pretty on the free service, too little and it's hard to get customers just to sign up. There's also a little bit more work involved in separating the free functionality from the premium functionality in a service. You have to ensure that the free tier of customers can use the application at the same time as paid customers who will have added features available to them.

Given that I prefer this pricing strategy for the services that I use, I found it strange that I didn't sway towards this from the start. When you make a product or a service, you want people to use it and the easiest way to do that is to provide part of it for free. It's certainly not the best strategy for getting lots of sign ups, but it is the easiest.

I hesitated on using a paid strategy to begin with because I wanted people to experience the service first in it's entirety before deciding to pay for it. The only way to do this then is to give people a free trial period of the application in it's entirety. No locked or restricted features, just a window of time to try the whole application before they decide whether it's for them or not.

I'm Going Paid

And that's what I am sticking with. A paid strategy with just a 30 day window to try out the application for free before the customer has to decide whether to subscribe to the service or not. I think it's definitely the best strategy. Committing to a paid service or product means that you are more accountable for the success of it and therefore you are more likely to want to make it succeed.

I've had positive feedback on this already, but the only way to truly see if the service will be a success is by releasing it to the world and that will hopefully happen in the next couple of weeks. Stay tuned!

Paying For Software Is Smart

 •  Filed under SAAS, Products

Paying for tools is a smart choice. If programs like Keynote and Mail.app were actually profit centers for Apple, I would imagine that we'd have far better support, fewer long-term bugs and and most of all, a vibrant, ongoing effort to make them better.

Five Thoughts on Software by Seth Godin

I completely agree with this, after seeing Google eventually take down Reader, I've always swayed towards paying for tools and services when I can. They're more likely to be still running in the long term, offer greater support and they are updated more frequently to ensure their customers are still getting value.

There are exceptions to this though, but this is a rare exception only made possible by exceptional companies.

The Compromise of Free Services

 •  Filed under By Me, Products, SAAS

Free services are the most popular way to attract users, but what are you compromising on for this to happen?

The word 'free' is still a popular way for many online services to gain the users they need in order to start becoming more than just another blip on the Internet radar. With that enticing offer of being free, most people sign up, use the service and then decide if they want to keep using it or not. The pull of being free can be a powerful thing and like so many things people like it when they get something for free.

In the beginning users of the service are happy. They can't believe their luck that this service is free and they can use it on a daily basis. They love the new service and sing its praises to their friends who in turn sign up as well. It is free after all. The trend continues and if the service is a hit it can eventually scale to becoming the next big thing.

After a few years, the service owners wants to start making some money, but they don't want to charge their loyal users for the privilage of using their service. That would be a terrible idea. Instead the service owners decide to change some things about the way the service works. Maybe they limit the API, change a well liked feature to what the service owners think is better (for them anyway) or even just start throwing some ads in. That last one always works right?

Alas the loyal users of the service start to feel like they have been cheated and throw their arms up in the air in objection to the new changes the service are implementing. Just because they have been loyal to the service since its early days, it's wrongly assumed that the service owners are going to listen to their users. Sadly they don't. And then an amazing thing happens. Despite the drawbacks to using the service with the new changes they don't approve of, the users decide to keep using the service. It's not about free anymore though, it's about the people your connected to using this service. How will you ever connect to these people without this service?

Clearly I'm taking a few examples from social networks like Twitter and Facebook, but the rules apply to any service that starts out being free and refuses to entertain the idea of a paid account or subscription. The rule is that in order to gain the user base you need to become a smash hit, you need to make your service free for everyone. You need to make it instantly attractive for people to use and that starts with giving it away for free.

It's a plan that has been played out with many services now and while there have been successful exceptions to this (well done Trello), many free services stick to being free and then try to generate revenue by using brand advertising and promotion or selling data as a product to others.

It's at this point where the idea of a free account is nothing more than a compromise. In exchange for using the service in question, you must be prepared to accept the changes to the service and continue using it as best as you can. You might not like the changes that the service are implementing but the decision to continue using it or leave the service is down to you. You're the user after all.

This is the cost of many free services now. If they don't require something back from you in return now, chances are they will in the future. It's just a matter of deciding how much you're willing to compromise on to continue using the service.

What is my Target Market?

 •  Filed under By Me, SAAS, Products, Marketing

Continuing with the book, Book Yourself Solid, I've identified what my ideal client is, but what's my target market?

18 months ago if you asked me who my target market is then I would have to answer, "I haven't a clue". Fast forward to today and the answer is still pretty much the same. The reason for this is that I have two types of clients. My major clients are clients I work with in what I see as my target market, the healthcare sector, they're organisations and businesses that require deliver software for the NHS, GP's and other healthcare organisations in the UK. The minor clients are clients I do work for on a rare occasion. I might have provided a website or application for them and they never require much work to either fix or upgrade what they have. They usually require a single week's work every six months or so.

I'll be honest, I still don't know for definite what my target market should be. I'm still getting a feel for the kind of work I want to do and whether there's a long term future for me in that market. Ideally I would like to do consulting work for healthcare software providers or even straight to the healthcare businesses themselves, providing myself as a development consultant and resource, but I don't want to do this forever. There's two options I see ahead.

The first is looking into another target market. I have a few in mind but nothing concrete. The reason I am exploring other options is that while I have firm background in healthcare I also have some experience in other sectors. One area of work I did that was interesting was risk management solutions. I certainly wouldn't be adverse to working in this market again.

The second is building a revenue stream from a number of products that will provide a steady income over the next few years. It has to be years as anything short lived like a book or a screencast is only going to generate so much revenue over a short time frame. If I went down this road I would need to continue releasing books or screencasts every six months and I'm not sure that this plan is for me. Something more long term like a software product or service would definitely be something worth looking at however, getting the right product is a challenge to begin with.

I know what my target market should be and maybe that's enough for me to be going on with for the next few years. There's no rules to say I have to stay with that market. If it doesn't work out then I can always change.